DP8572 Spatial frictions
|Author(s):||Kristian Behrens, Giordano Mion, Yasusada Murata, Jens Suedekum|
|Publication Date:||September 2011|
|Keyword(s):||city-size distribution, markups, productivity, trade frictions, urban frictions|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=8572|
The world is replete with spatial frictions. Shipping goods across cities entails trade frictions. Commuting within cities causes urban frictions. How important are these frictions in shaping the spatial economy? We develop and quantify a novel framework to address this question at three different levels: Do spatial frictions matter for the city-size distribution? Do they affect individual city sizes? Do they contribute to the productivity advantage of large cities and the nature of competition in cities? The short answers are: no, yes, and it depends.